The USA100 is increasing in value for a seventh consecutive week and continues to renew its highs for 2023! The USA100 is only 0.65% lower from fully regaining all of the “lost ground” from 2022. The asset saw a sharp decline after the Ukraine-Russia conflict and the largest rate hiking cycle seen since 2004. However, all eyes are on today’s US inflation and tomorrow’s Central Bank press conference. Therefore, analysts do not expect volatility to cool off any time soon!
USA100
From the 100 stocks in the USA100, only 11 ended the day lower, while 89 stocks were in the green throughout the day. Broadcom, which is the seventh most influential stock, witnessed the largest gain, increasing by 9.00%. Broadcom continues to be one of the best performing stocks due to the latest company earnings which beat expectations. Additionally, the stock is supported by the company advising revenue from AI would double to $8 billion in 2024. The board of directors also advised the growth in AI would counterbalance the current challenges in the semiconductor market.
However, even though the majority of stocks within the USA100 rose in value on Monday, the top five most influential stocks declined. This includes Apple, Microsoft, Alphabet, Amazon, and NVIDIA. Of these stocks, the stocks which saw the largest decline was NVIDIA, dropping 1.85%. However, investors should note that Asian and European stocks are higher this morning, which continues to point to positive investor sentiment towards the asset class.
Today’s price movement will largely depend on the US inflation data. On Monday, investors priced in a weaker than expected Consumer Price Index. This is most probably due to deflation in China and lower producer prices which can also influence global inflation. This is due to the nature of the Chinese economy. For the USA100 to potentially continue its upward trend to previous highs, the CPI will need to read 3.00%. However, to see a stronger trend, investors will need clarity that a rate cut is likely by March 2024. For such an outcome, market participants may need to see a sharper decline in inflation such as a decline from 3.2% to 2.9%.
USDCHF
The USDCHF is trading higher since the opening of the European session, but remains lower than the open price. The Dollar Index is trading 0.22% lower and bond yields are 0.044% lower, which indicates the USDCHF may also come under further pressure. However, the price of the Dollar will largely be determined by today’s consumer inflation. In addition to this, tomorrow’s producer inflation and the Fed’s press conference will also create volatility.
The US Federal Reserve meeting will take place on Wednesday, and now, analysts are almost confident that the current interest rate will remain at 5.50%. However, investors and market participants continue to price in an earlier “pivot”. The central bank may again point out the possibility of maintaining high borrowing costs for a long time. Experts have revised their forecasts regarding the timing of an interest rate cut and are predicting May 2024, although previously, most estimated easing would begin in the first quarter.
Representatives of the Swiss National Bank will be convening a meeting on Thursday, and traders expect interest rates to remain at 1.70%. The head of the SNB, Mr Jordan, may indicate abandoning further tightening of monetary conditions which may pressure the Swiss Franc.
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Michalis Efthymiou
Market Analyst
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